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A top parliamentary committee has insisted Premiership Rugby clubs who are “financially unviable five years post-pandemic” should not have their Covid-19 loans extended.
The damning report from the Public Accounts Committee – an influential group of backbench MPs who probe state spending – singled out the process in which £124m of loans funded by the taxpayer were sent to Premiership Rugby clubs during the pandemic by the Department of Culture, Media and Sport, describing it as “weak from the start”.
“The PAC’s view is that loans, which were introduced as Covid support, should not be extended to provide support for bodies which are financially unviable five years post-pandemic,” the report says.
The report – DCMS Management of Covid-19 Loans – recommends that DCMS considers a range of options for the Treasury to recover the value of the loan book, including selling it to private lenders.
DCMS ‘overly optimistic’ over rugby recovery
Committee chair Sir Geoffrey Clifton-Brown said: “Cultural and sporting events came to an abrupt and shocking halt during lockdown, by law.
“In such circumstances, it is of course right that the Government came forward with necessary support to ensure the long-term future of foundational elements of our national life.
“But such support was contingent on the unprecedented nature of a global crisis, not to provide a lifetime guarantee to institutions like rugby union which may be experiencing financial difficulties five years later.”
The Public Accounts Committee further reports that “DCMS is being overly optimistic in expecting that all funds will be recouped”, with uncertainty high over whether the loan book will ever be repaid. DCMS refuted this claim in a letter by department permanent secretary Susannah Storey to Clifton-Brown.
DCMS lent a total of £474m to 120 borrowers between 2020 and 2024. As of October last year it had received £41m back but nine borrowers had become insolvent since the first loan was issued.
The report, published today, also highlights a conflict of interest involving Storey, whose husband is on the board of Premier Rugby and a managing director at Premiership investor CVC Capital Partners.
It says the conflict was declared by Storey but prevented her from being questioned by MPs, leaving a “gap in senior oversight and accountability for such a significant amount of public money”.
In the letter to Clifton-Brown, Storey said it was not accurate to suggest there had been a gap in accountability. But Clifton-Brown responded, holding firm.
